Mumbai: The rupee erased all its morning gains to hit a new record low of 74.28 against the US dollar in afternoon trade on Tuesday, tracking weakness in local equity markets and Asian currencies. Brent crude oil prices rising above $84 per barrel and continued foreign capital outflow have also added pressure. At 2.06pm, the rupee was trading at 74.22, down 0.19% from its previous close of 74.07. The currency opened at 73.85 against the dollar and hit an all-time low of 74.28.
Traders said there was also some importer demand seen in afternoon trade, but intermittent dollar selling by the central bank is likely to prevent a steep fall in the unit, reported Reuters. Sentiment has also been weaker after the central bank held rates steady in a surprise move on Friday.
Oil prices rose to over $84 per barrel as more evidence emerged that crude exports from Iran, OPEC’s third-largest producer, are declining before the imposition of new U.S. sanctions and as a hurricane moved across the Gulf of Mexico.
The greenback rose 0.2% against a basket of currencies to 95.933, not far off a seven-week top of 96.127 hit last week. Ten-year Treasury yields resumed their steep climb to seven-year highs on Tuesday. That helped the dollar strengthen across the board with only Japan’s yen outperforming among the major currencies.
Foreign institutional investors (FIIs) sold shares net worth a net of Rs 1,805 crore Monday, provisional data showed. Forex dealers said besides strong demand for the American currency from importers, concerns rising fiscal deficit and capital outflows weighed on the domestic currency.
The BSE Sensex was traded 0.17% down at 34,417.43 points.